N489n 

* 


New  York  State  Franchise  Tax 
on  Business  Corporations 


(Corporation  Income  Tax) 


COMPLETE  text  of  the  New  York 
State  Corporation  Franchise  Tax 
Law,  Article  9- A,  as  amended  by 
Chap.  443,  Laws  of  1921,  approved 
April  30,  1921,  by  Chap.  447,  Laws  of 
1921,  approved  April  30,  1921,  and  by 
Chap.  705,  Laws  of  1921,  approved 
May  12,  1921. 


m Equitable 
Trust  Company 


OF  NEW  YORK 


New  York  State  Franchise  Tax 
on  Business  Corporations 

(Corporation  Income  Tax) 


Complete  text  of  the  New  York 
State  Corporation  Franchise  Tax 
Law,  Article  9-A,  as  amended  by 
Chap.  443,  Laws  of  1921,  by  Chap. 
447,  Laws  of  1921,  approved  April 
30,  1921,  and  Chap.  705,  Laws  of 
1921,  approved  May  12,  1921 

( Issued  June , 1921) 


the  equitable 
Trust  Company 

OF  NEW  YORK 


New  York^  Offices 
37  Wall  Street 

355  Madison  Avenue  (at  45th  St.) 
222  Broadway  (at  Park  Row) 


Foreign  Offices 

3 King  William  Street,  E.  C.  4 
London 

23  Rue  de  la  Paix 
Paris 


Digitized  by  the  Internet  Archive 
in  2017  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/newyorkstatefran00equi_0 


FOREWORD 


33  L.-U^r 


The  New  York  State  Franchise  Tax 
on  Business  Corporations  as  amended 
by  the  legislature  adjourned  April  16, 
192  i,  is  given  on  the  following  pages. 

The  tax  is  based  upon  the  net  in- 
come of  corporations  and  applies  to 
all  corporations  doing  business  in  the 
state  not  taxable  under  other  sections 
of  the  law  or  specifically  exempted. 

Matter  stricken  out  by  the  amend- 
ments is  omitted  and  new  matter  is 
shown  in  italics. 

The  text  herein  given  is  supple- 
mented by  marginal  references  and  an 
index  is  to  be  found  at  the  end  of  the 
pamphlet. 

The  Equitable  Trust  Company 
of  New  York 

June,  1921. 


STATE  OF  NEW  YORK 


Franchise  Tax  on  Business  Corporations 

Article  9-A  of  the  Tax  Law,  as  Amended  by  Chapter 
443  of  the  Laws  of  1921,  approved  April  30, 

1921 ; and  Chapter  447  of  the  Laws  of 
1921,  approved  April  30,  1921,  and 
Chapter  705  of  the  Laws  of  1921, 

Approved  May  12,  1921. 

Amendments  made  by  the  Laws  of  1921  are  shown  in  italics, 
and  are  effective  as  indicated. 

ARTICLE  9-A 

. Franchise  Tax  on  Business  Corporations. 


Sec.  208. 

Definitions. 

209. 

Franchise  tax  on  corporations  based 
on  net  income. 

210. 

Corporations  exempted  from  article. 

21 1. 

Reports  of  corporations  to  tax  com- 
mission. 

212. 

Reports  by  corporation  on  basis  of 
fiscal  year. 

213. 

Reports  to  be  sworn  to;  forms. 

214. 

Computation  of  tax. 

214a. 

Taxation  of  corporations  acquiring  as- 
sets or  franchises  of  other  corpora- 
tions. 

215. 

Rate  of  tax. 

216. 

Penalty  for  failure  to  report. 

1 

FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


Definition 

217.  Powers  of  tax  commission. 

218.  Revision  and  readjustment  of  accounts 

by  tax  commission. 

219.  Review  of  determination  of  tax  com- 

mission by  certiorari  and  regula- 
tions as  to  writ. 

219a.  Audit  and  statement  of  tax. 

219b.  Notice  of  tax. 

219c.  When  tax  payable. 

2i9d.  Corrections  and  changes. 

219c.  Warrant  for  the  collection  of  taxes. 

21 9f.  Action  for  recovery  of  taxes;  forfei- 
ture of  charter  by  delinquent  cor- 
porations. 

2i9g.  Deposit  of  revenues  collected. 

2i9h.  Disposition  of  revenues  collected. 

2 1 9!.  Secrecy  required  of  officials;  penalty 
for  violation. 

2 1 9j.  Exemptions  from  certain  other  taxa- 
tion. 

219k.  Limitation  of  time. 

219I.  Personal  property  defined. 

Sec.  208.  Definitions.  As  used  in  this  article : 

“Corporation” 

(1)  The  term  “corporation”  includes  a joint- 
stock  company  or  association; 

“Tangible 

personal 

property” 

(2)  The  words  “tangible  personal  property” 
shall  be  taken  to  mean  corporeal  personal  prop- 
erty, such  as  machinery,  tools,  implements,  goods, 
Wares  and  merchandise,  and  shall  not  be  taken  to 
mean  money,  deposits  in  bank,  shares  of  stock, 
bonds,  notes,  credits  or  evidences  of  an  interest  in 
property  and  evidences  of  debt; 

“Entire  net 
income” 

(3)  The  term  “entire  net  income”  means  the 
total  net  income  before  any  deductions  have  been 
made  for  taxes  paid  or  to  be  paid  to  the  govern- 

FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


ment  of  the  United  States  on  either  profits  or  net 
income  or  for  any  losses  sustained  by  the  corpora- 
tion in  other  fiscal  or  calendar  years  whether 
deducted  by  the  government  of  the  United  States 
or  not. 

SEC.  209.  Franchise  Tax  on  Corporations 
Based  on  Net  Income.  For  the  privilege  of 
exercising  its  franchise  in  this  state  in  a corporate 
or  organized  capacity  every  domestic  corporation, 
and  for  the  privilege  of  doing  business  in  this  state, 
every  foreign  corporation,  except  corporations 
specified  in  the  next  section,  shall  annually  pay  in 
advance  for  the  year  beginning  November  first 
next  succeeding  the  first  day  of  July  in  each  and 
every  year  an  annual  franchise  tax,  to  be  computed 
by  the  tax  commission  upon  the  basis  of  its  entire 
net  income  for  its  fiscal  or  the  calendar  year  next 
preceding,  as  hereinafter  provided,  which  entire 
net  income  is  presumably  the  same  as  the  entire 
net  income  upon  which  such  corporation  is  re- 
quired to  pay  a tax  to  the  United  States,  or  as  other- 
wise provided  by  section  two  hundred  and  fourteen 
of  the  tax  law,  except  that  the  entire  net  income  of 
a corporation  not  organized  under  the  laws  of  any 
state  within  the  United  States  which  shall  be  taken 
as  the  basis  of  computation  by  the  tax  commission 
shall  be  the  entire  net  income  in  fact  rather  than 
the  amount  earned  in  the  United  States  or  the 
amount  returned  to  the  United  States  treasury 
department. 

SEC.  210.  Corporations  Exempted  from 
Article.  Corporations  wholly  engaged  in  the 
purchase  and  sale  of,  and  holding  title  to,  real  estate 
for  themselves,  corporations  whose  sole  business 


Tax  based  on 
net  income 


Exempt 

corporations 


3 


*See  note  below 


fSee  note 


Reports  or 
returns  due 


Contents 
of  report 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

consists  of  holding  the  stocks  of  other  corporations 
for  the  purpose  of  controlling  the  management  and 
affairs  of  such  other  corporations,  except  such  as 
are  specifically  subject  to  report  under  the  pro- 
visions of  subdivision  nine  of  section  two  hundred 
and  eleven  of  the  tax  law,  and  corporations  liable 
to  tax  under  sections  one  hundred  and  eighty- 
four  to  one  hundred  and  eighty-nine  inclusive  of 
this  chapter,  banks,  savings  banks,  institutions  for 
savings,  title  guaranty,  insurance  or  surety  corpora- 
tions shall  be  exempt  from  the  payment  of  the 
taxes  prescribed  by  this  article. 

SEC.  21  i.  Reports  of  Corporations  to  Tax 
Commission.  Every  corporation  taxable  under 
this  article  as  well  as  foreign  corporations  having 
officers,  agents  or  representatives  within  the  state 
shall  annually  on  or  before  July  first,  or  within 
thirty  days  after  the  making  of  its  report  of  entire 
net  income  to  the  United  States  treasury  depart- 
ment for  any  fiscal  or  calendar  year,  preceding 
said  first  day  of  July,  transmit  to  the  tax  commis- 
sion a report  in  the  form  prescribed  by  the  tax 
commission,  specifying:  (i)  The  name  and  loca- 
tion of  the  principal  place  of  business  of  such  cor- 
poration, the  state  under  the  laws  of  which  or- 
ganized, and  the  date  thereof;  the  amount  of  its 

^Section  184 — Additional  franchise  tax  on  transportation  and  trans- 
mission corporations  and  associations. 

185 —  Franchise  tax  on  elevated  railroads  or  surface  rail- 
roads not  operated  by  steam. 

186 —  Franchise  tax  on  waterworks  companies,  gas  com- 
panies, electric  or  steam-heating,  lighting  and  power  com- 
panies. 

187 —  Franchise  tax  on  insurance  corporations. 

188 —  Franchise  tax  on  trust  companies. 

188- A — Taxation  of  investment  companies  (Morris  Plan 
and  similar  companies). 

189 —  Franchise  tax  on  savings  banks. 

tBanks,  including  foreign  bankers. 

4 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


issued  capital  stock  and  the  kind  of  business  trans- 
acted. Any  corporation  not  organized  under  the 
laws  of  any  state  within  the  United  States  shall 
state  the  facts  in  relation  to  its  entire  net  income 
wherever  earned  and  as  though  organized  under 
the  laws  of  this  state,  and  instead  of  stating  its 
income  as  returned  to  the  United  States  treasury 
department. 

(2)  The  amount  of  its  entire  net  income  for  its 
preceding  fiscal  or  the  preceding  calendar  year  as 
shown  in  the  last  return  of  annual  net  income 
made  by  it  to  the  United  States  treasury  depart- 
ment, except  as  provided  in  subdivision  one  of  this 
section.  If  the  corporation  shall  qlaim  that  the 
return  made  to  the  United  States  treasury  depart- 
ment was  inaccurate,  the  amount  claimed  by  it  to 
be  the  net  income  for  such  period  shall  be  speci- 
fied. If  any  deduction  has  been  allowed  for  losses 
sustained  by  the  corporation  in  prior  years  the 
amount  so  allowed  and  deducted  shall  be  specified. 

(3)  The  average  monthly  value  for  the  fiscal  or 
calendar  year  of  its  real  property  and  tangible 
personal  property  in  each  city,  village  or  portion 
of  a town  outside  of  a village  within  the  state,  and 
the  average  monthly  value  of  all  its  real  property 
and  tangible  personal  property  wherever  located. 

(4)  The  average  monthly  value  for  the  fiscal  or 
calendar  year  of  bills  and  accounts  receivable  aris- 
ing from  (a)  personal  property  sold  by  the  cor- 
poration from  merchandise  manufactured  by  it 
within  this  state;  (b)  personal  property  owned  by 
the  corporation  and  not  manufactured  by  it  within 
this  state  but  sold  by  it  or  its  agents  and  located 
within  the  state  at  the  time  of  the  receipt  of  the 


Net  income 


Claims  for 
inaccuracies 


Losses 


Real  and 
personal  property 


Bills  and  accounts 
receivable 


5 


Stock  of  other 

corporations 

owned 


Principal  places 
of  business 
in  state 


Other  facts 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

order;  (c)  the  purchase  or  sale  of,  or  trading  in, 
goods,  wares  or  merchandise  not  located  at  any 
place  at  which  the  corporation  conducted  a per- 
manent or  continuous  business  without  the  state, 
and  where  the  bills  and  accounts  receivable  arose 
from  orders  received  or  accepted  by  any  officer  or 
agent,  or  at  any  place  of  business,  in  this  state;  and 
(d)  services  performed  by  any  officer,  agent  or  rep- 
resentative of  the  corporation  connected  with,  sent 
from,  or  reporting,  either  directly  or  indirectly,  to 
any  officer  located  in  this  state,  or  at  any  office 
located,  owned,  rented  or  occupied  in  this  state. 
Also  the  average  total  monthly  value  for  the  fiscal 
or  calendar  year  of  bills  and  accounts  receivable 
arising  from  the  manufacture  by  it  of  personal 
property  or  the  purchase  or  sale  of,  or  trading  in, 
personal  property,  or  from  services  performed  by 
the  corporation,  its  officers  or  agents,  excluding 
those  arising  in  any  way  from  advances  or  loans. 

(5)  The  average  total  value  for  the  fiscal  or  cal- 
endar year  of  the  stock  of  other  corporations  owned 
by  the  corporation,  and  the  proportion  of  the  aver- 
age value  of  the  stock  of  such  other  corporations 
within  the  state  of  New  York,  as  allocated  pursu- 
ant to  section  two  hundred  and  fourteen  of  this 
chapter. 

(6)  If  the  corporation  has  no  real  or  tangible 
personal  property  within  the  state,  the  city,  village 
or  portion  of  a town  outside  of  a village  in  the 
state  in  which  is  located  the  office  in  which  its 
principal  financial  concerns  within  the  state  are 
transacted. 

(7)  Such  other  facts  as  the  tax  commission  may 
require  for  the  purpose  of  making  any  computa- 

6 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

tion  required  by  this  article,  or  for  the  purpose  of 
comparison  with  former  reports  to  determine 
whether  or  not  such  reports  were  erroneous  or 
fraudulent. 

(8)  Any  corporation  taxable  hereunder  upon  £btesn^tain 
its  entire  net  income  may  omit  from  its  report  the  be  omitted 
statements  required  by  subdivisions  four  and  five 
by  incorporating  in  its  report  a consent  to  be  taxed 
upon  its  entire  net  income.  Corporations  having 
no  net  income  shall,  however,  complete  the  segre- 
gation of  assets  in  every  case. 

( o ) Any  corporation  owning  or  controlling,  Holding  corporations 

• i i -i-  i 1 -it  11  r t may  be  squired  to 

either  directly  or  indirectly,  substantially  all  of  the  consolidate  returns 
capital  stock  of  another  corporation,  or  of  other 
corporations,  liable  to  report  under  this  article, 
may  be  required  to  make  a consolidated  report 
showing  the  combined  entire  net  income,  such  as- 
sets of  the  corporations  as  are  required  for  the  pur- 
poses of  this  article,  and  such  other  information  as 
the  tax  commission  may  require,  but  excluding 
intercorporate  stockholdings  and  intercorporate 
accounts. 

The  tax  commission  may  permit  the  filing  of 
a combined  report  where  substantially  all  the  capi- 
tal stock  of  two  or  more  corporations  liable  to 
taxation  under  this  article  is  owned  by  the  same 
interests.  The  tax  commission  may  impose  the 
tax  provided  by  this  article  as  though  the  com- 
bined entire  net  income  and  segregated  assets  were 
those  of  one  corporation,  or  may,  in  such  other 
manner  as  it  shall  determine,  equitably  adjust  the 
tax. 

Where  any  corporation  liable  to  taxation  under 
this  article  conducts  the  business  whether  under 
agreement  or  otherwise  in  such  manner  as  either 


7 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


Fiscal  year 
reports 


Reports  to  be 
sworn  to 


directly  or  indirectly  to  benefit  the  members  or 
stockholders  of  the  corporation,  or  any  of  them, 
or  any  person  or  persons,  directly  or  indirectly 
interested  in  such  business  by  selling  its  products 
or  the  goods  or  commodities  in  which  it  deals  at 
less  than  a fair  price  which  might  be  obtained 
therefor,  or  where  such  a corporation,  a substantial 
portion  of  whose  capital  stock  is  owned  either 
directly  or  indirectly  by  another  corporation,  ac- 
quires and  disposes  of  the  products  of  the  corpo- 
ration so  owning  the  substantial  portion  of  its 
capital  stock  in  such  a manner  as  to  create  a loss 
or  improper  net  income,  the  tax  commission  may 
require  such  facts  as  it  deems  necessary  for  the 
proper  computation  provided  by  this  article,  and 
may  for  the  purpose  of  the  act  determine  the 
amount  which  shall  be  deemed  to  be  the  entire  net 
income  of  the  business  of  such  corporation  for  the 
calendar  or  fiscal  year,  and  in  determining  such 
entire  net  income  the  tax  commission  shall  have 
regard  to  the  fair  profits  which,  but  for  any  agree- 
ment, arrangement  or  understanding,  might  be  or 
could  have  been  obtained  from  dealing  in  such 
products,  goods  or  commodities. 

SEC.  212.  Reports  by  Corporation  on  Basis  of 
Fiscal  Year.  A corporation  which  reports  to  the 
United  States  treasury  department  on  the  basis  of 
its  fiscal  year,  may  report  to  the  tax  commission 
upon  the  same  basis,  except  as  provided  in  section 
two  hundred  and  fourteen-a  of  this  chapter. 

SEC.  213.  Reports  to  be  Sworn  to;  Forms. 

Every  report  required  by  this  article  shall 
have  annexed  thereto  the  affidavit  of  the  presi- 
dent, vice-president,  secretary  or  treasurer  of 

8 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


the  corporation  to  the  effect  that  the  statements 
contained  therein  are  true.  Blank  forms  of  re- 
port shall  be  furnished  by  the  tax  commission,  on 
application,  but  failure  to  secure  such  a blank 
shall  not  release  any  corporation  from  the  obliga- 
tion of  making  a report  herein  required.  The 
commission  may  require  a further  or  supple- 
mental report  under  this  article  to  contain  further 
information  and  data  necessary  for  the  computa- 
tion of  the  tax  herein  provided. 

SEC.  214.  Computation  of  Tax.  If  the  entire 
business  of  the  corporation  be  transacted  within 
the  state,  the  tax  imposed  by  this  article,  if  im- 
posed upon  the  entire  net  income,  shall  be  based 
upon  the  entire  net  income  of  such  corporation  for 
such  fiscal  or  calendar  year  as  defined  in  section 
two  hundred  and  eight  of  this  chapter,  subject, 
however,  to  any  correction  thereof  for  fraud,  eva- 
sion or  error,  as  ascertained  by  the  state  tax  com- 
mission. If  the  entire  business  of  such  corporation 
be  not  transacted  within  the  state,  the  tax  imposed 
by  this  article  shall  be  based  upon  a proportion  of 
such  entire  net  income,  to  be  determined  in  ac- 
cordance with  the  following  rules:  The  propor- 
tion of  the  entire  net  income  of  the  corporation 
upon  which  the  tax  under  this  article  shall  be 
based,  shall  be  such  portion  of  the  entire  net  income 
as  the  aggregate  of 

( 1 ) The  average  monthly  value  of  the  real 
property  and  tangible  personal  property  within 
the  state. 

(2)  The  average  monthly  value  of  bills  and  ac- 
counts receivable  arising  from  (a)  personal  prop- 


Forms  to 
be  furnished 


Computation 
of  tax 


Net  income 
determined 


Apportionment 


Average  values 
of  property 
in  state 


Average  of  bills 
and  accounts 
receivable  appor- 
tioned to  state 


9 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


Value  of  stock 
apportioned 
to  state 


Value  of  all 
property 


Bills  and  accounts 
receivable  within 
and  without  state 


erty  sold  by  the  corporation  from  merchandise 
manufactured  by  it  within  this  state;  (b)  personal 
property  owned  by  the  corporation  and  not  manu- 
factured by  it  within  this  state  but  sold  by  it  or  its 
agents  and  located  within  the  state  at  the  time  of 
the  receipt  of  the  order;  (c)  the  purchase  or  sale 
of,  or  trading  in,  goods,  wares  or  merchandise  not 
located  at  any  place  at  which  the  corporation  con- 
ducted a permanent  or  continuous  business  with- 
out the  state,  and  where  the  bills  and  accounts 
receivable  arose  from  orders  received  or  accepted 
by  any  office  or  agent,  or  at  any  place  of  business, 
in  this  state;  and  (d)  services  performed  by  any 
officer,  agent  or  representative  of  the  corporation 
connected  with,  sent  from,  or  reporting,  either  di- 
rectly or  indirectly,  to  any  officer  located  in  this 
state  or  at  any  office  located,  owned,  rented  or  oc- 
cupied in  this  state. 

(3)  The  proportion  of  the  average  value  of  the 
stocks  of  other  corporations  owned  by  the  cor- 
poration, allocated  to  the  state  as  provided  by  this 
section  bears  to  the  aggregate  of 

(4)  The  average  monthly  value  of  all  the  real 
property  and  tangible  personal  property  of  the  cor- 
poration, wherever  located. 

(5)  The  average  total  monthly  value  for  the 
fiscal  or  calendar  year  of  bills  and  accounts  receiv- 
able arising  from  (a)  personal  property  sold  by 
the  corporation  from  merchandise  manufactured 
by  it  within  and  without  this  state;  and  (b)  the 
purchase,  or  sale  of,  or  trading  in,  personal  prop- 
erty, or  from  services  performed  by  the  corpora- 


10 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


tion,  its  officers  or  agents,  excluding  those  arising 
in  any  way  from  advances  or  loans. 

(6)  The  average  total  value  of  stocks  of  other 
corporations  owned  by  the  corporation. 

(7)  In  case  any  report  is  made  as  provided  by 
subdivision  nine  of  section  two  hundred  and  eleven 
of  the  tax  law,  the  tax  commission  may  assess  the 
tax  against  either  of  the  corporations  whose  assets 
or  net  income  are  involved  in  the  report  and  upon 
the  basis  of  the  combined  entire  net  income  and 
the  combined  segregated  assets  of  the  corporation 
and  upon  such  other  information  as  it  may  possess, 
or  may  adjust  the  tax  in  such  other  manner  as  it 
shall  determine  to  be  equitable. 

Real  property  and  tangible  personal  property 
shall  be  taken  at  its  actual  value  where  located. 
The  value  of  share  stock  of  another  corporation 
owned  by  a corporation  liable  hereunder  shall  for 
purposes  of  allocation  of  assets  be  apportioned  in 
and  out  of  the  state  in  accordance  with  the  value 
of  the  physical  property  in  and  out  of  the  state 
representing  such  share  stock. 

It  is  further  provided  that  every  domestic  cor- 
poration exercising  its  franchise  in  this  state  and 
every  foreign  corporation  doing  business  in  this 
state,  other  than  those  exempted  by  section  two 
hundred  and  ten  of  this  chapter,  shall  be  subject  to 
a minimum  tax  of  not  less  than  ten  dollars  and  not 
less  than  one  mill  upon  each  dollar  of  such  a part 
of  its  issued  capital  stock,  at  its  face  value,  as  the 
amount  of  its  gross  assets  employed  by  it  in  its 
business  in  this  state  bears  to  its  gross  assets  wher- 
ever employed  by  it  in  its  business.  But  if  such  a 
corporation  has  stock  without  par  value,  then  the 


Exception 


Value  of  all 
stocks  owned 


Assessment  on 
consolidated  return 


Real  and  personal 
property  at 
actual  value 


Tax  on  domestic 
and  foreign 
corporations 


Minimum 
tax  provided 


No  par 
value  stock 


II 


Valuation  of 
stock  of  no 
par  value 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

base  of  the  tax,  with  relation  to  such  stock , shall  be 
such  a portion  of  such  issued  capital  stock,  at  not 
less  than  its  actual  or  market  value , and  not  less 
than  five  dollars  per  share,  as  may  be  determined  by 
the  tax  commission,  as  its  gross  assets  employed  in 
its  business  in  this  state  bear  to  the  entire  gross  assets 
employed  in  its  business. 

If  such  a corporation  is  subject  to  a tax  at  the 
rate  of  one  mill,  and  it  maintains  no  regular  place 
of  business  outside  this  state,  except  a statutory 
office,  it  shall  be  taxed  upon  its  entire  issued  cap- 
ital stock  as  herein  provided.  ( Amended  by  Chap- 
ter 705,  Laws  of  1921,  approved  May  12,  1921,  ef- 
fective immediately.) 


Holding,  merger 
and  reorganization 
companies 


Consolidation 
of  return 


Minimum  tax 
assessed 


SEC.  214-a.  Taxation  of  Corporations  Acquir- 
ing Assets  or  Franchises  of  Other  Corporations. 

If  any  corporation  taxable  under  this  article  shall 
acquire  either  directly,  indirectly  or  by  merger  or 
consolidation  the  major  portion  of  the  assets  or 
the  franchise  of  another  corporation  or  of  corpora- 
tions exercising  any  franchise  or  franchises  or  do- 
ing any  business  in  this  state  during  any  year,  it 
shall  include  in  its  own  next  annual  return,  in  ad- 
dition to  its  own  entire  net  income,  so  much  of  the 
entire  net  income  of  the  corporation  or  corpora- 
tions whose  assets  or  franchise  it  acquired  as  shall 
not  have  been  used  or  included  in  measuring  a 
franchise  tax  to  this  state,  and  shall  be  taxed  upon 
such  combined  entire  net  incomes  for  the  year  to 
ensue  and  as  hereinbefore  provided.  The  pro- 
visions for  a minimum  tax  shall  be  applied  only 
when  under  such  provisions  a tax  will  result  in 
excess  of  the  amount  which  would  be  produced 
by  a tax  on  entire  net  income  as  hereinbefore  pro- 
vided and  then  in  lieu  thereof. 


1 2 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


This  section  shall  be  construed  as  having  been 
in  effect  as  of  the  date  of  the  original  enactment  of 
article  nine-a  of  the  tax  law,  as  added  by  chapter 
seven  hundred  and  twenty-six  of  the  laws  of  nine- 
teen hundred  and  seventeen. 

SEC.  215.  Rate  of  Tax.  The  tax  imposed  by 
this  article  shall  be  at  the  rate  of  four  and  one- 
half  per  centum  of  the  entire  net  income  of  the 
corporation  or  portion  thereof  taxable  within  the 
state,  determined  as  provided  by  this  article,  un- 
less taxable  upon  its  capital  stock  at  the  rate  of  one 
mill  or  subject  to  the  minimum  tax  of  ten  dollars, 
as  provided  in  section  two  hundred  and  fourteen 
of  the  tax  law. 

SEC.  216.  Penalty  for  Failure  to  Report.  Any 

corporation  which  fails  to  make  any  report  re- 
quired by  this  article  shall  be  liable  to  a penalty 
of  not  more  than  five  thousand  dollars  to  be  paid 
to  the  state,  to  be  collected  in  a civil  action,  at  the 
instance  of  the  tax  commission;  and  any  officer  of 
any  such  corporation  who  makes  a fraudulent  re- 
turn or  statement  with  intent  to  defeat  or  evade  the 
payment  of  the  taxes  prescribed  by  this  article 
shall  be  liable  to  a penalty  of  not  more  than  one 
thousand  dollars,  to  be  collected  in  like  manner. 
( Amended  by  Chapter  443,  Laws  of  1921,  ap- 
proved April  30,  1921,  effective  July  1,  1921.) 

SEC.  217.  Powers  of  Tax  Commission.  The 

tax  commission  may  for  good  cause  shown  ex- 
tend the  time  within  which  any  corporation  is  re- 
quired to  report  by  this  article.  If  any  report  re- 
quired by  this  article  be  not  made  as  herein  re- 
quired, the  tax  commission  is  authorized  to  make 
an  estimate  of  the  net  income  of  such  corporation 


Rate  of  tax 


Penalty  for 
failure  to 
make  return 


Powers  of  tax 
commission 


Extension 
of  time 


13 


Revision  of 
accounts  by  tax 
commission 


Certiorari 
to  review 
commission’s 
finding 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

and  of  the  amount  of  tax  due  under  this  article, 
from  any  information  in  its  possession,  and  to  or- 
der and  state  an  account  according  to  such  estimate 
for  the  taxes,  penalties  and  interest  due  the  state 
from  such  corporation.  All  the  authority  and 
powers  conferred  on  the  tax  commission  by  the 
provision  of  section  one  hundred  and  ninety-five 
of  the  tax  law  shall  have  full  force  and  effect  in 
respect  of  corporations  which  may  be  liable  here- 
under. 

SEC.  2 i 8.  Revision  and  Readjustment  of  Ac- 
counts by  Tax  Commission.  If  an  application  for 
revision  be  filed  with  the  commission  by  a cor- 
poration against  which  an  account  is  audited  and 
stated  within  one  year  from  the  time  any  such  ac- 
count shall  have  been  audited  and  stated,  the  com- 
mission shall  grant  a hearing  thereon  and  if  it 
shall  be  made  to  appear  upon  any  such  hearing  by 
evidence  submitted  to  it  or  otherwise,  that  any 
such  account  included  taxes  or  other  charges 
which  could  not  have  been  lawfully  demanded,  or 
that  payment  has  been  illegally  made  or  exacted 
of  any  such  account,  the  commision  shall  resettle 
the  same  according  to  law  and  the  facts,  and  adjust 
the  accounts  for  taxes  accordingly,  and  may,  in  its 
discretion,  modify  the  penalty  imposed  for  failure 
to  report  as  provided  in  this  article,  and  shall  send 
notice  of  its  determination  thereon  to  the  corpora- 
tion forthwith.  ( Amended  by  Chapter  443,  Laws 
of  1921,  approved  April  30,  1921,  effective  July 
1, 1921.) 

SEC.  219.  Review  of  Determination  of  Tax 
Commission  by  Certiorari  and  Regulations  as  to 
Writ.  The  determination  of  the  commission  upon 


14 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

any  application  made  to  it  by  any  corporation  for 
revision  and  resettlement  of  any  account,  as  pre- 
scribed by  this  article,  may  be  reviewed  in  the 
manner  prescribed  by  and  subject  to  the  provisions 
of  section  one  hundred  and  ninety-nine  of  this 
chapter. 

No  certiorari  to  review  any  audit  and  statement 
of  an  account  or  any  determination  by  the  com- 
mission under  this  article  shall  be  granted  unless 
notice  of  application  therefor  is  made  within 
thirty  days  after  the  service  of  the  notice  of  such 
determination.  Eight  days’  notice  shall  be  given 
to  the  commission  of  the  application  for  such  writ. 

The  full  amount  of  the  taxes,  percentage,  interest 
and  other  charges  audited  and  stated  in  such  ac- 
count must  be  deposited  with  the  state  tax  commis- 
sion before  making  the  application  and  an  under- 
taking filed  with  the  commission,  in  such  amount 
and  with  such  sureties  as  a justice  of  the  supreme 
court  shall  approve,  to  the  effect  that  if  such  writ  is 
dismissed  or  the  determination  of  the  commission 
affirmed,  the  applicant  for  the  writ  will  pay  all 
costs  and  charges  which  may  accrue  against  it  in  the 
prosecution  of  the  writ,  including  costs  of  all  ap- 
peals. ( Amended  by  Chapter  443,  Laws  of  1921, 
approved  April  2 o,  1921,  effective  July  1,  1921.) 

Sec.  219-a.  Audit  and  Statement  of  Tax.  On  Afu{!t  and 
or  before  the  first  day  of  December  in  each  year  of  tax 
the  tax  commission  shall  audit  and  state  the  ac- 
count of  each  corporation  known  to  be  liable  to  a 
tax  under  this  article,  for  its  preceding  fiscal  or  the 
preceding  calendar  year,  and  shall  compute  the  tax 
thereon  and  proceed  to  collect  the  same.  The  tax 
commission  shall  determine  the  portion  of  such  tax 
to  be  distributed  to  the  several  counties  and  the 


15 


Notice  of  tax 
assessment 


Tax  payable 
January  1 


Penalty 
for  delay 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

amounts  to  be  credited  to  the  several  cities  or  towns 
thereof,  when  the  same  is  collected  and  shall  cer- 
tify such  determination  to  the  state  comptroller. 
If  the  corporation  has  real  property  or  tangible 
personal  property  located  in  a village,  or  if  it  has 
no  real  or  tangible  personal  property  in  the  state 
but  the  office  in  which  its  principal  financial  con- 
cerns within  the  state  are  transacted  is  located  in  a 
village,  the  tax  commission  shall  certify  such  facts 
to  the  state  comptroller,  with  the  name  of  the  vil- 
lage in  which  such  office  or  property  is  located. 
[Amended  by  Chapter  443,  Laws  of  1921,  ap- 
proved April  30,  1921,  effective  July  1,  1921.) 

Sec.  219-b.  Notice  of  Tax.  Every  report  re- 
quired by  section  two  hundred  and  eleven  of  this 
chapter  shall  contain  the  post-office  address  of  the 
corporation  and  lines  or  spaces  upon  which  the 
corporation  shall  enter  its  entire  net  income. 
Notice  of  tax  assessment  shall  be  sent  by  mail  to 
the  post-office  address  given  in  the  report,  and  the 
record  that  such  notice  has  been  sent  shall  be  pre- 
sumptive evidence  of  the  giving  of  the  notice  and 
such  record  shall  be  preserved  by  the  tax  com- 
mission. 

SEC.  219-c.  When  Tax  Payable.  The  tax 
hereby  imposed  shall  be  paid  to  the  state  tax  com- 
mission on  or  before  the  first  day  of  January  of 
each  year,  or  within  thirty  days  after  notice  of  the 
tax  has  been  given  as  provided  in  section  two  hun- 
dred and  nineteen-b  of  this  chapter  if  such  notice 
is  given  subsequent  to  the  first  day  of  December  of 
the  year  for  which  such  tax  is  imposed.  If  such 
tax  be  not  so  paid,  or  in  the  case  of  additional 
taxes,  if  not  paid  within  thirty  days  after  notice  of 

16 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


such  additional  tax  has  been  given  as  provided  in 
section  two  hundred  and  nineteen-d  of  this  chapter 
and  such  notice  of  additional  tax  is  given  subse- 
quent to  the  first  day  of  December  of  the  year  for 
which  such  additional  tax  is  imposed,  the  corpora- 
tion liable  to  such  tax  shall  pay  to  the  state  tax 
commission , in  addition  to  the  amount  of  such  tax, 
or  additional  tax,  ten  per  centum  of  such  amount, 
plus  one  per  centum  for  each  month  the  tax  or  ad- 
ditional tax  remains  unpaid,  but  the  state  tax  com- 
mission upon  submission  to  it  of  satisfactory  proof 
that  the  failure  to  pay  such  taxes,  or  additional 
taxes,  within  the  time  prescribed  in  this  article, 
was  not  wilful  or  evasive,  may  modify  the  exaction 
to  not  less  than  one  per  centum  for  each  month 
following  the  due  date  of  the  tax.  Each  such  tax 
or  additional  tax  shall  be  a lien  upon  and  bind- 
ing upon  the  real  and  personal  property  of  the  cor- 
poration liable  to  pay  the  same  from  the  time  when 
it  is  payable  until  the  same  is  paid  in  full. 
(. Amended  by  Chapter  443,  Laws  of  1921,  ap- 
proved April  30,  1921,  effective  July  1,  1921.) 

SEC.  219-d.  Corrections  and  Changes.  If  the 

amount  of  the  net  income  for  any  year  of  any  cor- 
poration taxable  under  this  article  as  returned  to 
the  United  States  treasury  department  is  changed 
or  corrected  by  the  commissioner  of  internal 
revenue  or  other  officer  of  the  United  States  or 
other  competent  authority,  such  corporation,  with- 
in ten  days  after  receipt  of  notice  of  such  change 
or  correction,  shall  make  return  under  oath  or 
affirmation  to  the  tax  commission  of  such  changed 
or  corrected  net  income,  and  shall  concede  the  ac- 
curacy of  such  determination  or  state  wherein  it 
is  erroneous. 


Penalty  for 
delay  in 
payment — 
continued 


Tax  a lien 


Notice  of 
corrections 
and  changes 
of  income 
to  commission 


1 7 


Reaudit  by 
commission 


Review  of 
proceedings 
of  commission 


Credit  for 
excess  payment 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

The  tax  commission  shall  ascertain,  from  such 
return  and  any  other  information  in  the  possession 
of  the  commission,  the  entire  net  income  of  such 
corporation  for  the  fiscal  or  calendar  year  for 
which  such  change  or  correction  has  been  made  by 
such  commissioner  of  internal  revenue  or  other  of- 
ficer or  authority.  All  the  authority  conferred  on 
the  tax  commission  by  the  provisions  of  section  one 
hundred  and  ninety-five  of  this  chapter  is  hereby 
granted  to  it  in  respect  to  the  ascertainment  of 
such  entire  net  income.  The  tax  commission  shall 
thereupon  reaudit  and  restate  the  account  of  such 
corporation  for  taxes  based  upon  the  entire  net  in- 
come for  such  fiscal  or  calendar  year,  such  reaudit 
to  be  according  to  the  entire  net  income  so  ascer- 
tained by  the  tax  commission.  The  proceedings 
and  determination  of  the  tax  commission  in  the 
making  of  such  reassessment  may  be  revised  and 
readjusted  and  reviewed  in  the  manner  provided 
by  sections  two  hundred  and  eighteen  and  two 
hundred  and  nineteen  of  this  chapter,  as  in  the  case 
of  an  original  assessment  of  the  tax.  If  from  such 
reassessment  it  appears  that  such  corporation  shall 
have  paid  under  this  article  an  excess  of  tax  for 
the  year  for  which  such  reassessment  is  made,  the 
tax  commission  shall  credit  such  corporation  with 
such  amount.  Such  credit  may  be  assigned  by  the 
corporation  in  whose  favor  it  is  allowed  to  a cor- 
poration liable  to  pay  taxes  under  this  article,  and 
the  assignee  of  the  whole  or  any  part  of  such  credit 
on  filing  with  the  commission  such  assignment  shall 
thereupon  be  entitled  to  credit  upon  the  books  of 
the  tax  commission  for  the  amount  thereof  on  the 
current  account  for  taxes  of  such  assignee  in  the 
same  way  and  with  the  same  effect  as  though  the 

18 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


credit  had  originally  been  allowed  in  favor  of  such 
assignee.  If  from  such  reassessment  it  appears  that 
an  additional  tax  is  due  from  such  corporation  for 
such  year,  such  corporation  shall,  within  thirty 
days  after  notice  has  been  given  as  provided  in  sec- 
tion two  hundred  and  nineteen-b  of  this  chapter  by 
the  tax  commission,  pay  such  additional  tax. 
{Amended  by  Chapter  443,  Laws  of  1921,  ap- 
proved April  30,  1921,  effective  July  1,  1921.) 

SEC.  219-e.  Warrant  for  the  Collection  of 
Taxes.  If  the  tax  imposed  by  this  article  be  not 
paid  within  thirty  days  after  the  same  becomes 
due,  unless  an  appeal  or  other  proceeding  shall 
have  been  taken  to  review  the  same,  the  tax  com- 
mission may  issue  a warrant  under  its  official  seal 
directed  to  the  sheriff  of  any  county  of  the  state 
commanding  him  to  levy  upon  and  sell  the  real  and 
personal  property  of  the  corporation  owning  the 
same,  found  within  his  county,  for  the  payment  of 
the  amount  thereof,  with  the  added  penalties,  in- 
terest and  the  cost  of  executing  the  warrant,  and 
to  return  such  warrant  to  the  tax  commission  and 
pay  to  it  the  money  collected  by  virtue  thereof  by 
a time  to  be  therein  specified,  not  less  than  sixty 
days  from  the  date  of  the  warrant.  Such  warrant 
shall  be  a lien  upon  and  shall  bind  the  real  and  per- 
sonal property  of  the  corporation  against  whom  it 
is  issued  from  the  time  an  actual  levy  shall  be  made 
by  virtue  thereof.  The  sheriff  to  whom  any  such 
warrant  shall  be  directed  shall  proceed  upon  the 
same  in  all  respects,  with  like  effect,  and  in  the 
same  manner  as  prescribed  by  law  in  respect  to  exe- 
cutions issued  against  property  upon  judgments  of 
a court  of  record,  and  shall  be  entitled  to  the  same 
fees  for  his  services  in  executing  the  warrant,  to  be 


Notice  of 
additional 
assessment 


Warrant  for 
collection 
of  taxes 


19 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

collected  in  the  same  manner.  ( Amended  by 
Chapter  443,  Laws  of  1921,  approved  April  30, 
1921,  effective  July  1,1921.) 


Recovery  of 
tax  by  suit 


Forfeiture 
of  charter 


Deposit  of 
taxes  collected 


SEC.  219-f.  Action  for  Recovery  of  Taxes; 
Forfeiture  of  Charter  by  Delinquent  Corpora- 
tions. Actions  may  be  brought  at  any  time  by  the 
attorney-general  at  the  instance  of  the  tax  commis- 
sion, in  the  name  of  the  state,  to  recover  the  amount 
of  any  taxes,  penalties  and  interest  due  under  this 
article.  If  such  taxes  be  not  paid  within  one  year 
after  the  same  be  due,  and  the  tax  commission  is 
satisfied  that  the  failure  to  pay  the  same  is  inten- 
tional it  shall  so  report  to  the  attorney-general,  who 
shall  immediately  bring  an  action  in  the  name  of 
the  people  of  the  state,  for  the  forfeiture  of  the 
charter  or  franchise  of  any  corporation  failing  to 
make  such  payment,  and  if  it  be  found  that  such 
failure  was  intentional,  judgment  shall  be  rendered 
in  each  action  for  the  forfeiture  of  such  charter  and 
for  its  dissolution  if  a domestic  corporation  and 
if  a foreign  corporation  for  the  annulment  of  its 
franchise  to  do  business  in  this  state.  ( Amended 
by  Chapter  443,  Laws  of  1921,  approved  April  30, 
1921,  effective  July  1,  1921.) 

SEC.  219-g.  Deposit  of  Revenues  Collected. 

The  state  tax  commission  shall  deposit  daily  to  the 
credit  of  the  state  comptroller  on  account  of  the 
franchise  tax  all  taxes,  interest  and  penalties  col- 
lected under  this  article  in  responsible  banks,  bank- 
ing houses  or  trust  companies  in  the  state  to  be 
designated  by  the  state  comptroller  and  which 
shall  pay  the  highest  rate  of  interest  to  the  state 
for  such  deposit.  And  every  such  bank,  banking 
house  or  trust  company  shall  execute  and  file  in  the 


20 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


office  of  the  state  comptroller  an  undertaking  to 
the  state,  in  the  sum,  and  with  such  sureties,  as  are 
required  and  approved  by  the  comptroller,  for  the 
safe  keeping  and  prompt  payment  on  legal  demand 
therefor  of  all  such  moneys  held  by  or  on  deposit 
in  such  bank,  banking  house  or  trust  company,  with 
interest  thereon  on  daily  balances  at  such  rate  as 
the  comptroller  may  fix.  Every  such  undertaking 
shall  have  indorsed  thereon,  or  annexed  thereto, 
the  approval  of  the  attorney-general  as  to  its  form. 
The  state  comptroller  shall  on  the  first  day  of  each 
month  make  a verified  return  to  the  state  treasurer 
of  all  revenues  received  by  him  under  this  article 
during  the  preceding  month,  stating  by  whom  and 
when  paid,  and  shall  credit  himself  with  all  pay- 
ments made  to  county  treasurers  since  his  last  pre- 
vious return  pursuant  to  section  two  hundred  and 
nineteen-h  of  this  chapter.  The  tax  commission 
shall  in  due  time  for  the  distribution  thereof  certify 
to  the  comptroller  the  apportionment  to  the  various 
counties , towns , cities  and  other  municipal  subdivi- 
sions of  the  state  the  share  of  taxes  received  under 
this  article  to  which  they  are  entitled  and  upon 
verification  and  approval  of  such  apportionment 
by  him  the  comptroller  shall  distribute  such  share 
of  the  tax  moneys  in  accordance  with  the  provisions 
of  this  article . ( Amended  by  Chapter  443,  Laws 

of  1921,  approved  April  30,  1921,  effective  July  1, 
1921.) 

SEC.  219-h.  Disposition  of  Revenues  Col- 
lected. The  state  comptroller  shall  on  or  before  the 
twenty-fifth  day  of  each  month  pay  into  the  state 
treasury  to  the  credit  of  the  general  fund  all  in- 
terest and  penalties  and  two-thirds  of  all  taxes 
received  by  him  under  this  article  during  the  pre- 


Disposition  of 
revenue  and 
apportionment 
of  distribution 


21 


Disposition 
of  revenue — 
continued 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

ceding  calendar  month.  The  balance  of  all  taxes 
collected  and  received  by  him  under  this  article 
from  any  corporation,  as  appears  from  the  return 
made  by  him  to  the  state  treasurer,  shall,  on  or 
before  the  twenty-fifth  day  of  April,  July,  October 
and  January,  for  the  quarter  ending  with  the  last 
day  of  the  preceding  month,  be  distributed  and 
paid  by  him  to  the  treasurers  of  the  several  counties 
of  the  state  and  disposed  of  by  such  treasurers,  in 
accordance  with  the  following  rules:  ( Amended 
by  Chapter  443,  Laws  of  1921,  approved  April  30, 
1921,  effective  July  1,  1921.) 

(1)  If  the  corporation  has  no  tangible  personal 
property  within  the  state,  such  payment  shall  be 
made  to  the  county  treasurer  of  the  county  in  which 
is  located  the  office  at  which  its  principal  financial 
concerns  within  the  state  are  transacted ; 

(2)  If  the  corporation  has  tangible  personal 
property,  as  shown  by  its  report  pursuant  to  section 
two  hundred  and  eleven,  in  but  one  city  or  town  of 
the  state,  such  payment  shall  be  made  to  the  county 
treasurer  of  the  county  in  which  such  city  or  town 
is  located ; 

(3)  If  the  corporation  has  tangible  personal 
property  in  more  than  one  city  or  town  of  the  state, 
as  shown  by  its  report  pursuant  to  section  two  hun- 
dred and  eleven,  such  payment  shall  be  made  to 
the  county  treasurers  of  the  counties  in  which  such 
cities  or  towns  are  located  in  the  proportion  that 
the  average  monthly  value  of  the  tangible  personal 
property  of  such  corporation  in  the  cities  and  towns 
of  such  county  bears  to  the  average  monthly  value 
of  all  its  tangible  personal  property  within  the 
state ; 


22 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


(4)  In  making  such  payment  to  a county  treas- 
urer, the  state  comptroller  shall  indicate  the  por- 
tion thereof  to  be  credited  to  any  city  or  town  with- 
in the  county  on  account  of  the  location  therein  of 
its  principal  financial  office  or  property  as  deter- 
mined by  the  preceding  subdivisions,  and  if  such 
principal  financial  office  or  property  is  located  in 
a village  shall  indicate  the  village  in  which  it  is 
located;  if  such  principal  financial  office  or  prop- 
erty is  located  in  a city  or  in  a town  outside  of  a 
village,  the  whole  of  such  portion  shall  be  paid 
to  such  city  or  town  as  hereinafter  provided;  if 
such  principal  financial  office  or  property  is  located 
in  a village,  there  shall  be  paid  to  such  village 
as  hereinafter  provided  such  a part  of  the  entire 
amount  credited  to  the  town  as  the  entire  amount 
of  taxes  raised  by  said  village,  or  portion  thereof 
in  said  town,  during  the  preceding  calendar  year 
for  village  and  town  purposes  bears  to  the  aggre- 
gate amount  so  raised  by  the  town  and  village  dur- 
ing the  preceding  calendar  year  for  town  and  vil- 
lage purposes. 

(5)  As  to  any  county  wholly  included  within  a 
city  such  payment  shall  be  made  to  the  chamber- 
lain  or  other  chief  fiscal  officer  of  such  city  and  be 
paid  into  the  general  fund  for  city  purposes; 

(6)  As  to  any  county  not  wholly  included  with- 
in a city  the  county  treasurer  shall  within  ten  days 
after  the  receipt  thereof  pay  to  the  chief  fiscal  of- 
ficer of  a city  or  to  the  chief  fiscal  officer  of  a vil- 
lage or  to  the  supervisor  of  a town  the  portion  of 
money  received  by  him  from  the  state  comptroller 
to  which  such  city,  village  or  town  is  entitled, 
which  shall  be  credited  by  such  officer  to  general 


Disposition  of 
revenue — 
continued 


23 


Disposition  of 
revenue — 
continued 


Secrecy 
required 
of  officials 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

city,  village  or  town  purposes.  The  sum  so  paid 
to  the  supervisor  of  a town  shall  he  further  dis- 
tributed by  him  as  provided  in  subdivision  seven 
following. 

(7)  Upon  the  distribution  of  such  revenues  as 
hereinbefore  provided  the  entire  allotment  of  any 
town  paid  to  the  supervisor  thereof  shall  be  further 
distributed  by  him  as  follows:  One-third  thereof 
shall  be  apportioned  among  the  several  school  dis- 
tricts in  such  town  in  the  proportions  that  the  total 
amount  of  the  assessed  valuation  of  all  the  real  prop- 
erty of  such  corporations  in  each  of  said  school  dis- 
tricts, respectively , or  part  thereof  in  such  town, 
bears  to  the  aggregate  assessed  valuation  of  all  the 
real  property  of  such  corporations  in  the  entire 
town,  as  the  same  appears  upon  the  last  preceding 
town  assessment-roll.  The  balance  thereof  shall 
be  retained  by  him  and  credited  to  general  town 
purposes.  ( Subdivision  (6)  amended  and  (7) 
added  by  Chapter  447,  Laws  of  1921,  approved 
April  30,  1921,  effective  immediately.) 

SEC.  219-i.  Secrecy  Required  of  Officials;  Pen- 
alty for  Violation.  ( 1 ) Except  in  accordance  with 
proper  judicial  order  or  as  otherwise  provided  by 
law,  it  shall  be  unlawful  for  any  tax  commissioner, 
agent,  clerk  or  other  officer  or  employee  to  divulge 
or  make  known  in  any  manner  the  amount  of  in- 
come or  any  particulars  set  forth  or  disclosed  in 
any  report  under  this  article.  Nothing  herein 
shall  be  construed  to  prohibit  the  publication  of 
statistics  so  classified  as  to  prevent  the  identifica- 
tion of  particular  reports  and  the  items  thereof,  or 
the  publication  of  delinquent  lists  showing  the 
names  of  taxpayers  who  have  failed  to  pay  their 


24 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


taxes  at  the  time  and  in  the  manner  provided  by 
section  two  hundred  and  nineteen-c  together  with 
any  relevant  information  which  in  the  opinion  of 
the  tax  commission  may  assist  in  the  collection  of 
such  delinquent  taxes;  or  the  inspection  by  the 
attorney-general  or  other  legal  representatives  of 
the  state  of  the  report  of  any  corporation  which 
shall  bring  action  to  set  aside  or  review  the  tax 
based  thereon,  or  against  whom  an  action  or  pro- 
ceeding has  been  instituted  in  accordance  with  the 
provisions  of  sections  two  hundred  and  sixteen  or 
two  hundred  and  nineteen-f  of  this  article. 

Reports  shall  be  preserved  for  three  years,  and 
thereafter  until  the  state  tax  commission  orders 
them  to  be  destroyed. 

(2)  Any  offense  against  the  foregoing  provi- 
sion shall  be  punished  by  a fine  not  exceeding  one 
thousand  dollars  or  by  imprisonment  not  exceed- 
ing one  year,  or  both,  at  the  discretion  of  the  court 
and  if  the  offender  be  an  officer  or  employee  of 
the  state  he  shall  be  dismissed  from  office  and  be 
incapable  of  holding  any  public  office  in  this  state 
for  a period  of  five  years  thereafter.  ( Amended 
by  Chapter  443,  Laws  of  1921,  approved  April  30, 
1921,  effective  July  1,  1921.) 

SEC.  219-j.  Exemption  from  Certain  Other 

Taxation.  After  this  article  takes  effect,  corpora- 
tions taxable  thereunder  shall  not  be  assessed  on 
any  personal  property,  or  on  capital  stock  as  pro- 
vided for  in  section  twelve  of  this  chapter. 

SEC.  219-k.  Limitation  of  Time.  The  pro- 
visions of  the  code  of  civil  procedure  relative  to 
the  limitation  of  time  of  enforcing  a civil  remedy 
shall  not  apply  to  any  proceeding  or  action  taken 


Penalties 


Exemption 
from  other 
taxation 


Time  limit 
for  collection 
of  tax 


25 


“Personal 

property” 

defined 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 

to  levy,  appraise,  assess,  determine  or  enforce  the 
collection  of  any  tax  or  penalty  prescribed  by  this 
article. 

SEC.  219-I.  Personal  Property  Defined.  The 

term  “personal  property,”  for  the  purposes  of  the 
exemption  from  assessment  and  taxation  thereon 
locally  as  granted  by  section  two  hundred  and 
nineteen-j  of  this  chapter,  shall  include  any  mova- 
ble machinery  and  equipment  used  for  trade  or 
manufacture  and  not  essential  for  the  support  of 
the  building,  structure  or  superstructure,  and  re- 
movable without  material  injury  thereto.  The  term 
“personal  property,”  as  used  in  such  section,  shall 
not  include  boilers,  ventilating  apparatus,  eleva- 
tors, plumbing,  heating,  lighting  and  power  gen- 
erating apparatus,  shafting  other  than  counter- 
shafting, equipment  for  the  distribution  of  heat, 
light,  power,  gases  and  liquids,  nor  any  equipment 
consisting  of  structures  or  erections  to  the  opera- 
tion of  which  machinery  is  not  essential.  An  owner 
of  a building  is  entitled  to  the  same  exemption 
under  this  section  as  a lessee. 

As  amended  by  Chapter  443,  Laws  of  1921,  approved  April 
30,  1921,  effective  July  1,  1921 ; by  Chapter  447,  Laws  of  1921, 
approved  April  30,  1921,  effective  immediately;  and  by  Chapter 
705,  Laws  of  1921,  approved  May  12,  1921,  effective  imme- 
diately. 

Chapter  443  amends  sections  216,  218,  219,  219-a,  219-c, 
219-d,  219-e,  219-f,  219-g,  219-h  and  219-i. 

Chapter  447  amends  subdivision  6 of  section  219-h,  and  adds 
subdivision  7. 

Chapter  705  amends  section  214. 


26 


FRANCHISE  TAX  ON  BUSINESS  CORPORATIONS 


Personal  Service  Corporations 

Chapter  625,  Laws  of  1921,  approved  May  6, 
1921,  and  effective  immediately,  adds  a new  paragraph 
(h)  to  sub-division  (2)  of  section  359  of  the  Income 
Tax  Law  relating  to  individuals  exempting  certain 
income  as  follows: 

“Income  received  during  the  taxable  year  as  divi- 
dends from  a corporation  on  which  such  corporation 
has  already  paid  or  is  liable  by  assessment  to  pay  a tax 
pursuant  to  article  nine-a  of  this  chapter;  provided  that 
such  corporation  has  not  more  than  five  stockholders, 
that  its  capital  stock  is  not  a material  income-produc- 
ing factor,  but  that  its  income  is  to  be  ascribed  pri- 
marily to  the  activities  of  the  principal  stockholders 
who  are  themselves  regularly  engaged  in  the  active 
conduct  of  the  affairs  of  the  corporation  and  that  the 
total  sum  paid  by  it  to  elected  officers  is  not  more  than 
fifteen  per  centum  of  its  entire  net  income  as  deter- 
mined pursuant  to  said  article  nine-a;  provided  the 
taxpayer  in  his  return  shows  the  facts  with  respect 
to  the  nature  of  the  corporation  and  its  liability  under 
article  nine-a  of  this  chapter.” 

It  is  advisable,  therefore,  that  such  a corporation 
file  with  its  report  an  affidavit  showing  that  it  is 
clearly  within  the  provisions  above  set  forth. 


27 


Index 


Page 

Accounts  and  bills  receivable,  to  be  averaged 5>  9>  10 

Exception  n 

When  omitted 7 

Additional  assessment  and  notice  of 1 7>  I9 

Apportionment  of  net  income  within  and  without  state ....  9 

Of  tax  to  districts i5> 

Assessment,  notice  of 16 

Additional,  notice  of 19 

Association  considered  a corporation 2 

Audit  by  tax  commission 15 

Re-audit  by  commission 18 

Average  value  to  be  shown,  of  property 5,  6,  9,  10 

Of  bills  and  accounts  receivable 5,  9,  10 

Of  stock  owned 6,  10 

Basis  of  tax 3 

Bills  and  accounts  receivable 5,  9 

Omitted  when 7 

Certiorari,  writ  of,  to  review  commission 14 

Charter,  forfeited  when 20 

Claims  for  inaccuracies  in  U.  S.  returns 5 

Collection  of  taxes 16,  19 

Computation  of  tax 9 

Consent  to  be  taxed  on  entire  net  income  relieves  of  certain 

statements  7 

Consolidated  returns 7,  11,  12 

Contents  of  returns  or  reports 4-8 

Corporations  defined 2 

Exempt 3 

Subject  to  tax 3 

May  forfeit  charter  if  delinquent 20 

Corrections  and  changes  in  return 17 

Notice  of,  to  commissioner 17 

Re-audit  for 18 

Credit  for  excess  payment  of  tax 18 

Deductions  for  losses 5 

Definitions %. 2 

Deposit  of  taxes  collected 20 


28 


INDEX 


Page 

Disposition  of  revenues 21 

Dividends  of  certain  personal  service  corporations 27 

Domestic  corporations  doing  business  in  state 3,  11 

Entire  net  income  defined 2 

To  be  returned  as  in  U.  S.  return,  when 3,  4 

Excess  payment  of  tax,  credit  for 18 

Exempt  corporations 3 

Exemptions  from  certain  other  taxation 25 

Extension  of  time  for  filing  returns 13 

Filing  of  returns 4 

Fiscal  year  returns 8 

Foreign  resident  corporations,  tax  on 3,  n 

Forms  for  reports  and  returns 9 

Holding  companies,  taxation  of 7,11,  12 

Joint  stock  company  a corporation 2 

Lien  for  tax 17 

Limitation  on  time  for  recovery  of  tax  (none) 25 

Location  of  principal  places  of  business 6 

Losses 5 

Mergers  and  reorganizations,  taxation  in  case  of 7,  11,  12 

Minimum  tax II,  12 

Net  income,  defined 2 

Proportion  within  and  without  the  state 9 

Tax  based  on 3,  5 

Payment  of  tax 16 

Penalty  for  delay  in  payment 16 

For  disclosure  of  facts  by  official 25 

For  failure  to  report 13 

Personal  property  defined 26 

Shown  at  actual  value 1 1 

Personal  service  corporations 27 

Powers  of  tax  commission 13 

Principal  place  of  business  in  state 6 

Proceedings  of  tax  commission,  review  of 14,  18 

Property,  real  and  personal,  in  state,  report  of 5,  9 

In  each  city 5 

Wherever  located 5, 10 

Proportionment  of  net  income  within  and  without  the  state . 9 

Rate  of  tax 

Minimum  11,12 


29 


INDEX 


Page 

Real  property  to  be  shown  at  actual  value 1 1 

Re-audit  by  tax  commission 1 8 

Reorganization  and  mergers 7,  11,  12 

Reports  or  returns  due 4 

Returns  due 4 

Contents  of 4-8 

Extension  of  time 13 

For  fiscal  year 8 

Penalty  for  failure  to  report 13 

Similar  to  federal  return 3 

To  be  sworn  to 8 

Review  of  tax  commission  by  writ  of  certiorari 14 

Revision  of  accounts  by  tax  commission 14 

Secrecy  of  officials  required 24 

Penalty  for  violation 25 

Stock  owned  to  be  reported 6 

Of  no  par  value,  valuation  of  stock 12 

Stocks  of  other  corporations  owned  to  be  shown.  . . .6,  7,  io,  11 

Tangible  personal  property  defined 2 

To  be  taken  at  actual  value 1 1 

Tax:  based  on  net  income 3,  5 

A lien 17 

Collection  of 16,  19 

Computation  of 9 

Minimum  11,12 

Notice  of  assessment 16,  17,  19 

Payable 16 

Penalty 16 

Rate  of 13 

Suit  to  recover  tax 20 

Warrant  for  collection  of 19 

Tax  commission,  powers  of 13 

Review  of,  by  certiorari 14 

Revision  of  accounts  by 14 

Verification  of  reports  or  returns 8 

Warrant  for  collection  of  taxes 19 

Writ  of  certiorari  to  review  findings  of  tax  commission ....  14 


30 


